CSE 101 Supercomputers #01

8/12/2019 CSE 101 Supercomputers #01

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How computers have changed the way we trade

SUPERCOMPUTERS

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STOCK EXCHANGE

Raise CapitalHelps company

grow

Mobilize Savingsfor Investment

Provides Liquidity

Mutual Organizationsthat serve to facilitatetrading of shares of a

company

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HISTORY

Physical locations wherebuyers meet sellers.

Trading took place ontrading pits

Traders yelled and shoutedprice of stocks

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But its a hardjob!

A lot of room for manual

error

Very tiresome

Added cost for runners

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But the improvement of communications technology made the

need for physical trading floors unnecessary

Now trading is through Electronic Trading

Method of trading electronically.

Trading on Electronic Trading Platform

Virtual platform/computer system where securities or derivativestraded.

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BENEFITS OF AUTOMATED TRADING

Reduced cost of transactions: By automation through STP, there is no need

for a physical intermediary like a trading pit or runners.

Greater Liquidity: People can trade from anywhere, so more buyers and

sellers.

Increased Transparency: Easier to communicate information.

Minimize emotions: keep our emotions in check and preserves discipline.

Diversify: Ability to test different strategies.

Back testing: Uses historical trading data to determine viability of new idea.

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ALGORITHMIC TRADING

Use of electronictrading platform

Orders are placed

according to analgorithm

The algorithm executesa pre-programmed set

of instructions

Used by investmentbanks, institutional

investors

Helps drive largetransactions

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HIGH FREQUENCY TRADING

Another form ofalgorithmic trading

Uses sophisticated

tools and soft wares

Uses complex

algorithms

Rapidly tradeshuge block of

securities

Carried out by

supercomputers

Transactions within

a fraction of asecond

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BENEFITS OF HFT AND ALGORITHMIC TRADING

Provides increased liquidity

Leaves less room for error

Used for any trading strategymarket making, arbitrage, speculation etc

Helps humans to make decisions

Can make decisions itself based on historic and current data

Automatic charting and analysis

Various softwares for technical analysis

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ATS-AUTOMATIC TRADING SYSTEM

Computer trading program thatautomatically submits trades

No need for human intermediary

No scope for manual error

Decisions based on historic data,current data, fundamentals etc

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DHAKA STOCK EXCHANGE

DSE operationfullycomputerized

since 1998

Used

AutomatedSystem for theStock

Exchange of

Thailand

Upgraded to

ARMSAdvanceResilienceMatching

System

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FEATURES OF DSE AUTOMATED TRADING

MECHANISM

AOMAutomated Order Matching

MSA Plus Software

WAN/LAN (introduced in 2000)

Application software - TESAThe introduction of these facilities helped because:

Trading was extended to branch offices outside the DSE premises

Allowed to brokerage houses to use computers to execute trade orders &

allowed investors to trade online

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AOM - AUTOMATED ORDER MATCHING

Within each price group, orders are arranged according to time.

Orders groupedbest price takes precedence

According to price and then time priority

ARMS system queues and arranges the orders

At first, brokerage house electronically submits order to DSE mainframe computer

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MSA PLUS SOFTWARE

Upgradedtrading

software

Bridge toreal time

onlinetrading

Place buy or

sell ordersonline

No need forauthorized

trader as anintermediary

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MSA PLUS SOFTWARE

Order executed

Then to the trading engine

Goes to the trading terminal

Place an order

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BENEFITS OF MSA PLUS SOFTWARE

Ensuretransparency

Increasemanagement

efficiency

Decreaserisk at clients

end

Can viewfinancial

statements

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APPLICATION SOFTWARE - TESA

The application, which runs in DSE for trading, is called TESA (The

Electronic Securities Architecture).

MSA is the "Gateway" between the traders and the Stock Exchange, and

manages all the transactions between the traders and the Trading Engine.

TWS is the Front-end Application closer to investors, where they can submitBuy/Sell orders for their desired securities.

This co-operative mechanism enables very high speed processing which is

essential for today's electronic markets.

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FUNCTIONS OF TESA

Market Information: Supplying all market information needed to formulate the buy

and sell decisions

Order Management: Accept, validate and store orders and quotes from broker

workstations and / or systems.

Order Execution: Automatically executes orders when buy and sell prices match. Trade Reporting: Trade execution reports are provided to each trade participant, to

the settlement system and / or the depository and to the market.

Index Calculation: Calculates and publishes market indices.

Market Access: Provide exchange members with efficient affordable GUI-based tools

for accessing the market.

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BENEFITS OF TESA SOLUTION

Fault Tolerance: With most systems Fault Tolerance is created at the

application level. Fault Tolerance is a fundamental design feature of the HP

NonStop architecture.

Data Integrity: TESA employs standard HP tools to achieve exceptional data

integrity Scalability: The ability of an exchange to accommodate extraordinary

increases in transaction volumes without loss of its Capital investment in

automation. The HP NonStop Server is massively scalable due to Parallel

processors.

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DSE ATS

DSE Automated Trading System (HP NonStop S7806) is running on fault

tolerant, high available, scalable and maintainable Mainframe Server.

DSE has developed Automated Clearing and Settlement System, which is a

Web based integrated software

It preserves all the information for every members of Dhaka Stock ExchangeBroker can access required information.

All disk drives are mirrored so, if any of the disk crashes the exact copy of

the data is available at online.

No single component failure will halt the system.

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Mainframe Server of HP NonStop S7810 Server

HP NonStop S-Series Server is being used in the

world including New York Stock Exchange, BombayStock Exchange, Bursa Malaysia Stock Exchange &

London Stock Exchange

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MARKET INFORMATION

Market Information is a real-time market data system. It collects, manages,

generates and stores information relating to trade instruments and issuing

companies.

Collecting Real-Time Market Information: Bids, offers, last sale etc

Collecting company Information

Generating Market Statistics

Market control workstation: allows exchange officials to control operations of

market

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DSE TRADING SYSTEM COMMUNICATION

ARCHITECTURE

Broker Terminal: Broker terminal is the gateway between the Users (Trader, Dealer,

Investor and iTrader) and the Exchange.

Admin Terminal: Administrative functions within the Broker are carried out from the Admin

Terminal like Client Registration, Trader Control etc

Trader Terminal: Traders are users who trade on behalf of client or investors.

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Dealer Terminal: All Dealer activities are performed here as like Trader

Terminal.

Investor Terminal: Clients/Investors are allowed to place local orders through

Internet (as per Client/Investor registration on Brokerage House). Investor

can view Market information in Investor Terminal. iTrader Terminal: iTrader user manages Investor orders, it is special purpose

terminal to handle only the Investors Orders that are submitted through

Internet.

View Terminal (non trade terminal): View Terminal users can locally login into

MSA Plus application and access the information available locally .

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CSE 101 Supercomputers #01

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